Existing standards of corporate reporting in the UK are ‘good’ and ‘there continues to be an improvement in the general quality of US GAAP and IFRS annual reports and accounts’.

This is according to the Financial Reporting Council (FRC) following its assessment of 326 sets of accounts for the last financial year.

AIM companies were required to use IFRS for the first time from December 2007 and the FRC, the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance, believes they have benefitted from the experience of listed companies who had already been through this transition. However, the FRC goes on to say that further quality improvements are necessary if they are to match the standards set by their listed counterparts.

The report also found areas of continued weakness. Companies need to continue to improve their disclosures of financial risks.

Bill Knight, chairman of the panel said: “Disclosure should be full, frank and company-specific and should avoid generic descriptions of the economy which do not help users to understand how the board is responding to the challenges faced by their particular company. This approach is all  the more important in the context of a reporting frame-work which relies increasingly on a management approach, based on information used internally by the board to manage their businesses”.